Volkswagen adjusted its profit expectations downward due to the impact of tariffs in the second quarter of the year
Volkswagen Suffers Significant Losses Due to US-Europe Trade War
In a long-awaited assessment, Volkswagen, Europe's largest carmaker, has revealed the impact of US President Donald Trump's trade war with Europe on its 2025 earnings. The US-Europe trade war, particularly the 25% US tariffs on EU cars implemented in April 2025, has significantly impacted Volkswagen's earnings.
For 2025 earnings, Volkswagen reported a €1.3 billion ($1.53 billion) hit to operating profit in the first half of 2025 due to these tariffs. The company's luxury divisions, Audi and Porsche, were particularly affected, with profits dropping approximately 64% and 91%, respectively. Both brands also adjusted their full-year margin forecasts downward, from 5.5–6.5% initially to a range of 4–5% by mid-2025.
However, the tariff-related decrease in operating profit did not affect the company's full-year sales, which are expected to be level with the previous year. This is a shift from the previously forecasted rise of up to 5%.
The tariffs did not directly impact Volkswagen’s 2019 Q2 profit, as they were implemented in 2025 and predate the earnings period. The company reported an operating profit of 3.8 billion euros ($4.46 billion) in the quarter ended June 30, a decrease of 29% compared to the previous year.
Volkswagen is currently undergoing a significant restructuring process, aiming to cut over 35,000 jobs by the end of the decade. The company's car sales in June were among the laggards, reflecting the major overhaul.
The assessment does not specify which tariffs were referred to in the statement, nor does it mention any specific models or regions that were particularly affected by the tariffs. The tariffs did not alter Volkswagen's overall profitability outlook beyond 2025.
In response to the tariffs, Volkswagen, along with its peers, is urging European trade negotiators to reach an agreement to replace the 25% tariff on their cars, which has been in effect since April 2025. The company's assessment of the impact of tariffs on its business is a significant step towards understanding the financial implications of the US-Europe trade war on the auto industry.
[1] [Source for the financial impact on 2025 earnings] [3] [Source for the financial impact on Audi and Porsche divisions]
- The assessment of Volkswagen's 2025 earnings revealed that the US-Europe trade war, specifically the 25% US tariffs on EU cars implemented in April 2025, have had a substantial negative impact on the general-news and finance sectors, particularly affecting the index of automobile industry profitability and business operations.
- The luxury divisions of Volkswagen, Audi and Porsche, have been significantly affected by these tariffs, with profits dropping 64% and 91%, respectively, as mentioned in the finding. This has raised concerns in the political sphere regarding the long-term impacts of such trade wars on the overall economy.
- In an effort to mitigate these losses, Volkswagen, along with other industry peers, has been urging European trade negotiators to work towards replacing the 25% tariff on their cars, thus affecting the future direction of the trade industry and potential business-politics relations between the US and Europe.
